Governors Support HHS Secretary In Lawsuit Over Preferred Drug Lists; Lawsuit Seeks to Restrict State Cost-Containment Measure

7/15/2002

From: Chris LaPaille of the National Governors Association, 202-624-5334

WASHINGTON, July 15 -- The nation's governors voiced their concern over a lawsuit which seeks to bar states from using preferred drug lists as Medicaid cost-controlling measures. The lawsuit, filed by the Pharmaceutical Research and Manufacturers of America (PhRMA), asserts that Secretary of Health and Human Services (HHS) Tommy G. Thompson and Centers for Medicare & Medicaid Services Administrator Thomas A. Scully overstepped their authority in approving a state plan amendment that allows the state of Michigan to create a preferred drug list to help manage its Medicaid costs.

"The nation's governors are extremely disappointed with the course of action chosen by PhRMA," said NGA Chairman Michigan Gov. John Engler. "It is unfortunate that their organization feels compelled to use the court system to manipulate public policy. With pharmacy costs alone rising 15-20 percent each year, all purchasers, including the manufacturers themselves, are using tools that manage costs while maintaining quality and access to affordable pharmaceuticals.

The lawsuit, Pharmaceutical Research and Manufacturers of America v. Thompson, seeks to invalidate a Michigan program that aims to lower the state's expenses for prescription drugs by creating a preferred drug list that restricts the list of drugs that can be prescribed to Medicaid patients. Drugs not on the list would require prior authorization by the state for prescriptions, but PhRMA holds that Michigan's program, and other Medicaid programs using this approach would "deny poor patients access to needed prescription drugs, forcing them to settle for older, less expensive and often less effective medications."

Engler continued, "Preferred drug lists are the most effective tool available to states and the nation's governors support their use as viable and legal tools to control Medicaid spending on prescription drugs. Governors feel that PhRMA has a responsibility to sit down and work collaboratively with states and HHS to develop policies that help low-income individuals -not drag us into court."

Of key concern to governors was a section of the suit that seeks to enjoin the programs of "other states that are similarly situated". This provision, which doesn't specifically name other states, would impact at least 11 other states using preferred drug lists including, Florida, Hawaii, Illinois, Indiana, Louisiana, Minnesota, Mississippi, New Mexico, Ohio, Vermont, and West Virginia.

"It boils down to this," said NGA Vice Chairman Kentucky Gov. Paul Patton. "In this fiscal environment, if you don't find ways to manage drug utilization sensibly, you will have to cut people off of the rolls completely. States are using committees made up of physicians and pharmacists to select appropriate medications based on scientific review and while cost is one of many factors, it is often the least important factor when a state decides to put a drug on a preferred drug list."

The nation's Governors not only believe that HHS has the authority to approve these programs, but call on Congress to provide states with more flexible authority to control costs. States need the same authority that the private sector and other providers have to effectively control pharmaceutical costs.